JERUSALEM, July 21 (Reuters) - Israeli Prime Minister Ehud Olmert said Syria was setting an "impossible threshhold" for peace talks by demanding Israel commit to withdraw fully from the occupied Golan Heights before negotiations resume.

In remarks broadcast on Saturday by Israel's Channel 10 television, Olmert responded to Syrian President Bashar al-Assad's call in a speech on Tuesday for Israel to guarantee a full pullback from the land it captured in a 1967 war.

Olmert said Israel was ready to withdraw from the Golan. "Certainly we will also have to make concessions," he said at a collective farm in northern Israel.

But Assad's demand for a guarantee to remove Jewish settlers and troops from the entire territory before talks resumed "creates conditions that set an impossible threshhold for the start of negotiations," Olmert said.

Israeli leaders have agreed in the past to withdraw from the Golan in exchange for a peace treaty with Syria. But the last negotiations between the sides broke down in 2000 over a dispute about the terms of such an Israeli pullout.

Israeli media reports said Assad's talks this past week in Damascus with Iranian President Mahmoud Ahmadinejad, who has called for Israel's destruction, had raised concerns in Israel that the two may be improving their trade and military ties.

Israel has demanded Syria sever relations with Iran, whose nuclear programme it wants halted. Israel also wants Syria to stop aiding Hezbollah guerrillas in Lebanon and Palestinian militants groups including the Islamist Hamas.

Israel and Syria had been passing messages in recent months, largely through international mediators, among them Turkish officials and United Nations envoy Michael Williams, to explore the possibility of resuming peace talks.

Shimon Peres, a Nobel peace laureate inaugurated as Israel's president this week, urged the warring countries on Thursday to negotiate for a settlement. He urged the sides to meet "to symbolise mutual recognition as an opening stage" for talks.

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